Brief Exercise 8-3 At the end or 2016, Blue Spruce Corp. has accounts receivable

Question

Brief Exercise 8-3 At the end or 2016, Blue Spruce Corp. has accounts receivable of $691,000 and an allowance for doubtrul accounts or $27,210. On Januay 24, 2017, t is leerned that the company's receivable from Madonna Inc. is not collectible and thererore management authonzes a write-off of $4,006. (a) Prepare the journal entry to record the write-orr. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Account Titles and Explanation Debit Credit (b) What is the cash realizable value of the accounts receivable before the write-off and after the wnite-off? Before Write-Ofl After Write-of Cash realizable value

Explanation / Answer

Answer a

Answer (b)

Cash realizable value before write off = $691,000 - $27,210 = $663,790

Cash realizable value after write off = ($691,000 - $4,006 )- ($27,210 - $4,006 ) = $686,994 - $23,204 = $663,790

Accounts Titles & Explanation Debit ($) Credit ($) Allowance for Doubtful Accounts 4,006 Accounts Receivable 4,006

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